On Thursday, the US Treasury issued a Press release which explains why there should be fair regulation for the cryptocurrency industry globally. Following an executive order from President Biden in March 2022, the United States Treasury released a document titled framework for international engagement on cryptocurrencies in Spanish.
The executive order was intended to optimize the many opportunities in digital assets without too much exposure to their risks. The executive order emphasized the essence of partnering with other regulators to lessen these potential risks. According to this framework, it is essential to protect companies, consumers and investors against exposure to the risks of crypto assets.
However, also it is important that the cryptocurrency ecosystem is safe and remains on a solid foundation. Therefore, the framework suggested researching and issuing national digital currencies and other blockchain-related technologies that align with appropriate securities as permitted by law.
The US Treasury claims that one of the reasons for the huge risks in the digital asset industry is the imbalance in compliance, regulation and supervision. They are also concerned that the ecosystem’s current anti-money laundering policies are inadequate.
Therefore, it would be nearly impossible to investigate claims of fraudulent cryptocurrency transactions. Furthermore, there would be no way to prevent the illegal transfer of funds to foreign companies. The framework adds that maintaining the best regulatory policies requires the cooperation of governments and private authorities around the world and market participants in those places.
Likewise, these requirements are necessary for all market players to operate under the same conditions. Thus, many unbanked people can access safe and efficient financial services. Consequently, national and international transactions become less expensive. The United States is already in contact with many agencies in other regions to establish a standard and uniform crypto regulation around the world.
Some agencies that have agreed to work with the US include the Financial Action Task Force (FATF), the World Bank, the Financial Stability Board (FSB), the G7 and the G20. The framework further adds that setting standards is critical to ensuring that crucial policies are included in any new system. Such important policies include privacy, increased accessibility to safe and efficient financial services, and interoperability of financial transactions between nations.
Influencing the global cryptocurrency market
The framework separately repeated that the current administration prioritizes crypto regulation. This is why the US Treasury developed a detailed crypto regulatory framework. However, the supervisory functions of the crypto market have not been clarified.
There is no clear distinction between the aspects of the crypto market that are governed by the two main financial regulators (the Commodities and Futures Trading Commission, CFTC, and the Securities and Exchange Commission, SEC). The SEC continues to battle crypto companies in court, as it insists that all cryptos (except bitcoin) are securities. Therefore, the agency cannot hold talks with players in the crypto market. Therefore, it cannot meet the proposals contained in the framework of the treasury.